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Transport operator in 'excellent shape'

Stagecoach urges end to arguments over privatisation

Martin GriffithsTransport group Stagecoach has warned of the damaging effects that the current debate around the privatisation of the industry could have on its business.

The company says it believes in the “robust case for partnership” and says it needs the argument over the involvement of private operators settled to ensure it can continue to invest.

Stagecoach was recently awarded the East Coast Main Line and says it is currently working with the government to provide more trains and extra capacity on all its franchise routes.

“We believe our services, with commercial operators providing the capital for investment, the expertise and operational flexibility, are best placed to help governments and local authorities meet their objectives for economic growth, devolution and social mobility,” said the company in a statement accompanying its half-year results.

“We are assisting them in developing practical and appropriate policies to tackle the interconnected issues around travel costs, road congestion, rail capacity and investment in our road and rail infrastructure.

“We remain mindful of the current political debate in the UK around the best model to deliver public transport and the potential impact on our bus and rail businesses. We are engaging constructively with major UK political parties on this issue and continue to make a robust case for partnership working and the substantial benefits it brings for passengers and taxpayers.

“We believe passionately that the benefits of public transport are best maximised by transport operators, central government and local government working together.  We have invested heavily in transport operations over many years and a stable regulatory environment is critical to ensuring continued high investment and innovation.  That combined with our innovation and low fares should enable us to maintain high levels of passenger satisfaction and good financial returns.”

Stagecoach has made an “overall satisfactory start” to the second half of the current financial year and says there has been no material change to its expected adjusted earnings per share for the year.

Recent trading means it has changed its view of the likely divisional mix of profit and has lowered expectations of 2014/15 operating profit from its regional UK Bus and North America businesses. However, this is broadly offset by other areas, including the share of profit expected from its franchise partner Virgin Rail.

” We do not expect the new East Coast rail franchise to have a material impact on 2014/15 earnings but we do expect it to make a significant contribution from 2015/16 onwards.  We remain in a strong financial position, with opportunities for further growth.”

Half year pre-tax profits came in at £108.6 million against £98.3m last time on revenue up from £1.4 billion to £1.5bn. The interim dividend rises 10.3% from 2.9p to 3.2p.

Chief executive, Martin Griffiths, said:  n“These are a good set of results, reflecting the strength of our businesses in the UK, mainland Europe and North America.  We have improved further the travel experience for our customers, provided value for money for taxpayers, invested in public transport and added value for our shareholders.

“Strong partnerships between transport operators and central and local government are the best way to maximise the value in public transport for our communities and for our regional economies. We are proud that our record of significant investment, innovation, and low fares has delivered strong transport networks and high levels of passenger satisfaction.

“Overall the Group is in excellent financial shape and we are well placed to drive value through new opportunities in our core bus and rail markets.  While we have changed our view of the likely divisional mix of profit for the year ending 30 April 2015, with lower expected operating profit from our regional UK Bus and North America businesses broadly offset by other areas, we remain on course to achieve our expected adjusted earnings per share for the year.”

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